DEALER-CHIC Trend Briefing - November 2011

Deal hunting has become an integral part of daily life for millions of consumers. We dive into the drivers behind the deal phenomenon, the long-term impact on all B2C brands, and (of course) the latest brand innovations...

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DEALER-CHIC Trend Briefing - November 2011

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trendwatching.com, independent and opinionated, is one of the world’s leading consumertrends firm, relying on a global network of hundreds of spotters. Our trends, examples andinsights are delivered to 160,000 business professionals in more than 180 countries.More information at www.trendwatching.comNovember 2011 | As deal hunting has become an integral part of DEALER-CHIC | Consumers have always loved getting gooddaily life for millions of consumers, it’s time to dive into the drivers deals or exclusive rewards, but rather than having to hide one’sbehind this trend and its long term impact on all B2C brands. And haggling, securing the best deal is now accepted, if not admiredyes, countless examples are included ;-) by one’s fellow consumers. Deal hunting will continue to be an integral part of consumers’ lives, as its now about more than justNEW: We are working hard on our 2012 Trend Report, due 21 saving money: it’s the thrill, the pursuit, the control, and the per-November 2011. Highlighting all the consumer trends, insights ceived smartness, and thus a source of status too.and innovations that need to be on your radar in 2012. More info,including how to secure your early-bird discount, is here » Now, were not saying that all of consumption will be dominated by discounted goods and services. However, for status- conscious consumers (read: all of them ;-), making the most of discounts and deals is no longer considered cumbersome or even embarrassing, but simply smart. In fact, DEALER-CHIC is yet another example of the longer-term shifts playing out in the consumer arena, where savvy consumers have more choice, higher expectations, and more control, while mature consumers have an ever-less reverential relationship to brands. So, here are just three reasons why DEALER-CHIC is set to get bigger and bigger in the coming years: 1. MORE FOR LESS: While many people in developed economies may have less money to spend right now, consumers everywhere will forever look to experi- ence more. 2. THE MEDIUM IS THE MOTIVATION: Consumers are now being alerted to, using, reusing and sharing offers and deals via new (and therefore inﬁnitely more exciting and attractive) technologies. 3. BEST OF THE BEST: With instant mobile or online ac- cess to not only deals but reviews as well, consumers can now be conﬁdent they’re getting the best price for Source: thinkcvox the best product or service.We touched on PRICING PANDEMONIUM before, but it’s morethan time for a full Trend Brieﬁng on this phenomenon, looking atnot just the many new and innovative ways in which brands areusing promotions and offers, but how consumer attitudes to dis-counts and deals are changing.In fact, the avalanche of deals currently available to consumersare not just a short-term symptom of the ﬁnancial crisis; DEALER-CHIC is here to stay:You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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1. MORE FOR LESS Some MORE FOR LESS indicators: • When asked about eight money saving strategies, buy- ing items on sale (59%) or using coupons (48%) werePeople want to experience more, even when they have less to spend. the top two answers from consumers around the world. Coupons were most popular in China (67%), the US (66%) and Hong Kong (65%). While only just over a third of European (37%) and US (36%) consumers report shopping at value retailers to save money (Source: Niel- sen, October 2011). • 62% of US consumers rarely pay full price for clothing and 58% of UK consumers "dont like paying full price for anything" (Source: Mintel, September 2011). • 81% of US consumers think its fun to see how much money they can save by using coupons or their shopper loyalty card (Source: Deloitte 2010 American Pantry Sur- vey, July 2010). • Over 40% of coupon ‘enthusiasts’ had a household in- come of over USD 70,000 (Source: Neilsen, April 2010). • In India, 10.4% of the online population accessed a deal site in June 2011, with the market leader Snapdeal.com tripling its audience from the past year (Source: Source: Groupon comScore, July 2011).There’s no overlooking the fact that many consumers in mature • Leisure, movies and dining accounted for over 50% ofmarkets like Europe, Japan and Northern America are at the very the Chinese daily deal market in August 2011 (Source:least fearful of their ﬁnancial futures, meaning that any kind of Dataotuan, September 2011).deal or discount is welcomed with open arms.* • In September 2011, the top 10 grossing ‘daily deal’ of-But even those consumers who don’t need to scrimp and save fers in the US included a USD 399 seven-night resort(including the middle classes in emerging markets), are still en- stay, a USD 6 burger meal, a USD 5 movie ticket andthusiastically seeking out deals in almost every purchase, from soda deal, and a USD 70 Cirque de Soleil theater ticketeveryday staples to one-off indulgences. (Source: Yipit, September 2011).Why? Because for consumers driven by collecting as many and * Showing some empathy and compassion shouldn’t be a newas varied experiences as possible, every cent, yen or penny trend for any business professional. In fact, we recommend thatsaved, means more to spend on new products, services and anyone waiting for the crisis to pass before reverting back to aultimately experiences. purely proﬁt-driven, ‘business-as-usual’ corporate mindset, stops reading now and checks out our Trend Briefing on GENERATION GAs our recent Trend Brieﬁng on RECOMMERCE showed, con- from way back in February 2009.sumers are embracing anything that unlocks new experi-ences at lower cost (such as trading in used possessions), andDEALER-CHIC is yet another part of this phenomenon.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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2. THE MEDIUM IS THE • 79% of smartphone owners use their phones for shop- ping related activities, and of those nearly half (48%) use their phones to look for or use discounts and couponsMOTIVATION (Source: Google & IPSOS, April 2011). • 53% of Chinese and 47% of Korean smartphone ownersDeals are now a source of tech and online innovation, and thus have used mobile coupons to purchase products in-smart, cool and fun to switched-on consumers. store. Comparative ﬁgures for other countries are: 22% US, 14% UK and Turkey, 13% Spain, 11% Germany, 10% France and 7% The Netherlands (Source: Google & IPSOS, July 2011). • 67% of mobile users agree that location-based coupons on a mobile device are "convenient and useful", while 42% say they have already used a mobile coupon of some kind (Source: Prosper Mobile Insights, October 2011). 3. BEST OF THE BEST Why consumers can be increasingly conﬁdent they are getting the best price and the best product.Let’s look at ‘classic’ deals for a moment, especially paper cou-pons: they were ﬁddly, generic, required forward planning andneeded to be publicly processed at the cash desk, none of whichmade them attractive to consumers. It didn’t help that most sav-ings were focused on getting 10 cents off a can of tuna, versusthe many entertainment-heavy discounts to be had in CouponWorld 2.0.Now discounts and deals are increasingly innovative and at-tractive in where, when and how they are delivered and re- DEALER-CHIC doesnt mean an endless race to the bottom,deemed. They can be sourced online or via smartphones at the where promotions dictate where and when consumers buy. Notright moment. Deals can be hyper-personalized or shared with because consumers won’t seek out deals and discounts (be-friends. They can be exclusive, convenient or fun. Even securing cause they will), but because poor quality businesses will noand redeeming them (when using a smartphone, for all to see), longer simply be able to turn to promotions to attract cus-can be a source of accomplishment or status. tomers, as consumers are able to instantly check reviews and ratings* before they make a purchase. And a bad product orAll of this drives DEALER-CHIC: deals are now relevant, timely service will be a bad deal at any price ;-)and interesting; using them is savvy, sophisticated and perfectfor experience-hungry consumers. Just one example:Some indicators: Launched in November 2010, SNIQUEaway is an invite-only travel deals website operated by US based Smarter Travel Media • Online coupons account for only 1% of all coupons dis- (owner of TripAdvisor). The limited-time-only deals, all feature four tributed, but 10% of those that are redeemed (Source: star or more properties that were given the highest ratings in Tri- Catalina, April 2011). pAdvisor reviews, ensuring each deal is pre-vetted.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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NEXT* Our recent Trend Brieﬁng on RETAIL RENAISSANCE high-lighted how for growing numbers of consumers, the online worldis blending with the real world to a degree where OFF=ON. Andwith the omnipresence of all things online comes online expecta- An even bigger deal ecosystem, more personalization, moretions: instant price transparency, reviews, comparisons and direct loyalty schemes, more pressure on brands to deliver deal-deals, 24/7. immune brilliance as an integral part of everything they sell and promote.INCOMPARABLEThe counter-trend to DEALER-CHIC: desirable stuff that doesn’thave to be discounted because there’s no alternative for it.For every trend there’s a counter trend, as no trend applies uni-formly to all consumers or all brands. Yes, more brands than everbefore will experiment with imaginative ways to offer deals anddiscounts (and some of them won’t even seem like deals), andyes, consumers will be able to take advantage of promotions inalmost every product category.But we’ll also see the rise of INCOMPARABLE offerings: prod-ucts and services that are of such high quality, so unique, so So how will DEALER-CHIC evolve in the year to come? Someauthentic, so personalized, or so immediate that consumers pointers:won’t be able to (or even want to) look for reviews, pricecomparisons, discounts or deals. One to keep in mind if you • Consumers will become even more conditioned in ex-feel DEALER-CHIC is not a trend you want to be part of. pecting deals for anything. • There will be no deal-fatigue as both deal-fueled impulse buying and targeted search for deals get more sophisti- cated, moving away from the current shotgun approach: ◦ Impulse buys will be triggered by ever more curated, more targeted offers to consumers based on (known) proﬁle and preferences. These offers will ﬁnd consumers, not the other way around. Basically, permission based deals. ◦ Targeted search for deals will become more relevant and accurate, as localized and real- time deals proliferate. • Deal sites will focus much more on loyalty, using deals to attract new, loyal customers (and reward existing ones). This will further reduce (or even eliminate) any stigma attached to brands that offer deals. • Real-time reviews of any deal will be easier to ﬁnd, if not automatically accompanying the deals. • More brands will justify ‘full’ prices by adding or high- lighting anything that’s INCOMPARABLE about their product or service.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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• Food | Gilt Taste offers deals on luxury, artisanal foods, while Munch on Me offers deals on single dishes at fea-EXAMPLES tured restaurants and bars. • Groceries | In August 2011, Aisle50 launched in the US, offering consumers the opportunity to buy one deal eachEnough theory. Learn from the examples below of brands and day on groceries such as food products, with pricebusiness already making deals more mobile, relevant, instant, points generally in the 3-10 USD bracket.cool, integrated, seamless, interactive and yes, fun! • Lifestyle | Zipongo focuses on deals that encourageDAILY DEALS healthy eating and living, while Heartsy is a group- buying site offering deals on Etsy sellers products.Of course, it’s impossible to look at DEALER-CHIC without ac- • Music | groopEase offers deals on albums from up-and-knowledging the daily deal phenomenon. Whatever the potential coming artists at discounts of up to 75%, RCRD Dealsﬂaws in Groupon’s business model, over doubling their mailing offers music products and experiences ranging fromlist from 50 million at the end of 2010 to 115 million by August band discographies to backstage VIP experiences, and2011, shows that for consumers at least, they are doing some- 1band 1brand offers weekly deals on an emerging fash-thing right (Source: Reuters). ion brand and music artist.Indeed, is there any niche where consumers can’t receive daily • Education | In September 2011, The National Louisdeals via email? Just a few recent spottings: University in Chicago in the US became the ﬁrst educa- tional establishment in the world to sell a course on a daily deal site. • Financial Services | In July 2011, Dutch ﬁnancial institu- tion ING ran a deal in Canada offering CAD 185 when the user opened an ING Thrive account. • Kids | DoodleDeals partnered with Diapers.com to offer subscribers kids themed deals. • Pets | Coupawz offers deals on products for dogs, cats and other pets. • LGBT | The Daily Hookup has a team of curators who vet the site’s gay-friendly fashion, nightlife and vacation deals. • Sports | CrowdSeats offers subscribers up to 90% off • Adult | ExoticDeals features a new adult-only deal every sports tickets in Los Angeles, San Francisco, New York, 69 hours, while marijuana-lovers can receive deals from Boston and Chicago. WeedMaps. • Travel | Groupon Getaways sold USD 9.6 million worth of holidays in its ﬁrst full month after launch (Source: Yipit, September 2011). Other travel deals sites include Living Social Escapes and Yuupon. While Travelzoo Local Deals focuses on restaurant, event or leisure deals that appeal to consumers on vacation. • Entertainment | Goldstar sells half-price event tickets to venues including Cirque du Soleil and Madison Square Garden. • Nightlife | Poggled offers deals for bars and clubs in New York and Chicago.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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RIGHT HERE, RIGHT NOW • QuickerFeet is an app that enables retailers in AMP Shopping Centers in Australia and New Zealand to notify nearby shoppers of new promotions.New technologies (Apps! NFC! Alerts!) have made deals and dis- • AT&T’s ShopAlerts and O2s Priority Moments servicescounts all about NOWISM and the here-and-now, and the pre- can alert the networks customers to exclusive offersserve of early adopters (therefore exciting and very DEALER- and deals based on their location.CHIC ;-). And there are a number of services to help those who are out-Check out these services helping consumers ﬁnd the deals going and-about looking for speciﬁc deals:on right around them: • Notikum is a real-time, location-based app for Singapo- reans which enables users to ﬁnd deals near them, or- ganized into categories of "Shop", "Eat" and "Play". • BiteHunter is an app which searches restaurant portals and social networks to show users nearby dining deals • Groupon launched Groupon Now on its mobile apps in in real time. April 2011. Users can get short-term deals (often valid only for a few hours or at speciﬁc times) for local busi- • Willcall enables users in San Francisco to search and nesses. purchase half price same-day tickets for live theater and music events. • Touchtown is an Israeli developed app that shows cus- tomers deals in their vicinity. • While for those looking for a last minute hotel, Priceline launched their Tonight-Only iOS app in September • Valpak’s mobile apps allow users to see coupons over- 2011. laid onto their phone’s camera, as well as a map. There are even services to help consumers ﬁnd and use dealsA number of services are also enabling consumers to opt-in to once theyre in the store:alerts for nearby deals: • Brouha is a mobile messaging platform that allows cus- • In China, during July 2011, South Korean mobile com- tomers to receive offers and information when in-store, munications ﬁrm SK Telecom tested a service synchro- without having to reveal personal data. nizing tablet-equipped shopping carts with consumers’You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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DEAL ME IN smartphones to deliver real-time, in-store information using indoor positioning technology. • Aisle 411 is a shopping app that helps shoppers ﬁnd where products are located in stores, and delivers avail- Consumers know that there are almost always deals out there, but the sheer number of providers and platforms makes it difﬁcult able digital coupons to users’ smartphones. Shoppers to know how to ﬁnd them. Which of course means there’s a big can also get points for various activities (such as map- win for anyone or anything that can ﬂag or even create deals, ping a list, or searching for and sharing items), which which are relevant or tailored to consumers’ personal interests: may unlock further offers from selected retailers and brands.One ﬁnal example to show just how smart local deals are becom-ing: • American Express launched its Link-Like-Love social commerce program in July 2011. The free service gives AMEX cardholders relevant deals and experiences • ThinkNear automatically generates coupons during based on their likes, interests and social connections on businesses slow trading hours. Companies inform Facebook. ThinkNear about their typical slow periods, and a range of discounts to be offered during such times. ThinkNear • Launched in June 2011, KoalaDeal provides users with also monitors the local environment for factors that a customized list of daily deals. Users begin by teaching could cause slow-downs, such as rain and snow. When KoalaDeal about their tastes and interests; they can such periods occur, ThinkNear automatically generates choose categories manually, or let the site scan their coupons for nearby consumers, either as ads in mobile past purchases in Gmail, or their interests as indicated apps, or direct real-time alerts to those who’ve opted in. on Facebook or Twitter. Using this information, Koa- laDeal searches over 45 daily deals sites for relevant offers to present the user with. • In July 2011, location-based social network Foursquare started showing users deals from Living Social, Gilt Groupe, AT&T and Groupon. The service also introduced a feature where users who had added a venue to their to-do list were notiﬁed if a deal became available at the venue. • Delta Air Lines announced in July 2011 they were part- nering with Living Social to enable users to receive local deals for the places they are traveling to. Customers only receive offers which are valid during their trip, and are automatically unsubscribed at the end of their trip.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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REWARD INC. • In September 2011 Danish supermarket Netto teamed up with telecoms operator TDC to create their Nettalk mobile service. Customers register their supermarket loyalty cards to their mobile account, and depending onWatching new customers get great deals is a sure-ﬁre irritant for how much they spend, can earn up to two hours extraregular patrons. Especially when new technologies make it easier talk time per month.than ever to reward loyal customers with special deals: DEALIRIOUS Of course DEALER-CHIC is more about changing consumer atti- tudes than new technologies. Coupons were simply about saving money, whereas the new breed of deals are often about making the pursuit of a good deal fun, entertaining and savvy: • Daily deal site Bloomspot launched their PRIME service in Q2 2011. The service integrates with retailers’ credit card systems, to give customers rewards based on the total amount spent and for repeat visits. The company claims that these rewards mean customers spend an average of 50% more than the value of the coupon. • In March 2011, location-based gaming platform SCVNGR launched a mobile payment service LevelUp that mixes deals with rewards for repeat customers. LevelUp offers customers a daily deal of USD 5, 10 or 20 credit at a featured merchant, redeemed when paying with the service’s QR code-based mobile app. Custom- ers can unlock further credit with additional purchases. • Launched in September 2011, Groupon Rewards cre- • Sneakpeeq is an online deal site however no prices are ates a new class of deal only available to customers who listed. Instead, users have to click on the item to take a have spent a minimum sum with a merchant. The service "peeq" and see the price; each "peeq" causes the items works with existing point-of-sale systems when custom- price to decrease, but only until the site’s limited stock ers use a credit or debit card they registered with Grou- runs out. Shoppers have 15 seconds to click and buy. pon. They can choose to check prices at a later date, al- though this may mean losing out to another buyer. • The Target RedCard, the retailer’s own-branded credit and debit card offers shoppers a 5% discount on all purchases. Lowes own-branded cards offer customers • To promote the launch of their Regent Street, London a similar discount. store, Japanese fashion retailer Uniqlo installed the Uniqlo Happy Machine. At various times, the machine would release certain items at heavily discounted prices.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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• In May 2011, French supermarket group Carrefour or- ganized the "Hora Mágica" (Magic Hour) for 200 fami- lies in Brazil. For one hour the selected customers (all • US based menswear etailer Bonobos ran an ‘online holders of the retailers loyalty card) had exclusive ac- cess to the store in Osasco, up to a 50% discount on Easter egg hunt’, with promotional codes hidden on non-food products, and a welcome breakfast. pages of Bonobos site that users could use to claim special offers ranging from 10 to 500 USD off purchases. • During September and October 2011, US womenswear retailer Lane Bryant promoted its T3 jeans range with an interactive Facebook campaign. Consumers could play the Spin & Win game once a day to try and win a USD • In August 2011, the daily deal site Living Social offered 75 gift card redeemable in-store, with 62 prizes available passengers in a London taxi the choice of continuing to each day. their destination, or a surprise experience determined by the roll of a die. Experiences included cookery classes and nature visits. • In September 2011, Stockholms ICA Vanadis super- market introduced an initiative where product discounts increased as more customers ‘checked in’ to the retailer • In March 2011, US retailer Gap launched a one-off deals on Facebook. site, gapmyprice.com, where shoppers could decide how much they wanted to pay for their khakis and make an offer online. The retailer then put forward its price,You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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which consumers could accept or make a further bid until a ﬁnal price was agreed on. • Daitan (a dealership selling used vehicles from Japa- • In June 2011, luxury fashion brand Oscar de la Renta nese automotive brand Honda) gave Brazilians the op- launched their own private discount club, Backstage portunity to propose prices for cars on its website. Via Pass to sell discounted items directly to its customers the "Faça sua Oferta" ("Make your offer") page, con- rather than via secondary ﬂash sale sites. sumers could put forward the ﬁgure they wished to pay, and if the offer was accepted Daitans sales team con- tacted them to arrange the sale. • US based ScoreBig offers consumers discounted event and sports tickets. Similar to travel-deal site Priceline, users choose a seating area and make an offer for tick- ets, which are either accepted or rejected by the venue.In fact, there’s barely a sector or business that isn’t embracingDEALER-CHIC, even those that would traditionally shy away from • In May 2011, US based fashion designer Derek Lam putdiscounting: ﬁve dresses from his 16-piece 2011 collection, which was shown at New York Fashion Week during February 2011 on eBay. Users of the auction site were asked to vote for their favorite ﬁve to determine which of the 16 should go on sale at buy it now ﬁxed prices. 120,000 eBay users voted; priced at USD 175 to USD 225, the dresses were signiﬁcantly more affordable than Lams usual creations.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)

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OPPORTUNITIES Every B2C brand will have to deal with DEALER-CHIC’s impact, and there are plenty of opportunities to be had. True entrepreneurs should be wetting themselves at the possibili- ties that this whole deal ecosystem throws up: from new sectors, to ancillary services, to deal review sites, to new technologies. Because if you get it right, consumers will want to hear from you (but dont forget to keep businesses happy too!). • June 2011 saw US based Savored launch; a members- For brands, DEALER-CHIC is not about giving everything away or only website giving users discounts of 30% at a hand- wildly slashing prices. The PERFORM OR PERISH message still picked selection of high-end restaurants in ten cities holds true. Instead, brands should be thinking about the ways in across the country. Rather than offering customers a set which DEALER-CHIC enables them reach out to (new) audiences, deal, restaurants make a certain number of tables avail- engage with them in novel ways, and help them do the things able to Savored members, who pay a booking fee of 10 they want to do at a lower cost. USD to receive a 30% discount. This is applied to the ﬁnal bill for all food and drink, without the need for cou- Last but not least, heres a deal from us for you: our next free pons or deal codes. Trend Brieﬁng will hit your inbox on 1 December, so make sure you’re subscribed. • Users of the Daily Gobbles mobile app can also get deals when eating off-peak at various restaurants in New York. Rather than requiring a coupon, diners upload a photo of their check to receive a Paypal credit. • In April 2011, US based vacation ﬂash sales site Jetset- ter teamed up with private online community ASMALL- WORLD to offer ASW members discounted vacation opportunities, curated by Jetsetter.You are reading a PDF version of “DEALER-CHIC” (www.trendwatching.com/trends/dealerchic)